Cable Industry Heads for $6 Billion in Business Services Revenue

But that’s still only scratching the surface of the estimated $130 billion to $140 billion national market for commercial telecom services, said industry experts. Speaking at a Light Reading conference in New York earlier this month on the future of cable business services , they said cable’s current take still represents just 4 percent to 5 percent of the total telecom services haul, leaving plenty of room for more growth.

Industry experts see technology trends, such as the rapid movement to the cloud and the swiftly growing adoption of smartphones, paving the way for continued incursions by cable operators into the lucrative small-to-midsized-business (SMB) market. That market is estimated to be at least $50 billion to $75 billion, depending upon where the bar is set, making it the largest segment of the overall commercial services market.

Cable will nearly double its share of the SMB market, from 3.3 percent today to 6.5 percent in 2015, generating $8 billion in revenue from that segment alone by then, predicted Craig Clausen, executive vice president of New Paradigm Resources Group. Speaking on one conference panel, Clausen said cable operators can accomplish that just by continuing to serve SoHo (1-2 employees), “micro” businesses (up to 20 employees) and larger SMBs (up to 100 employees). He said most of those firms have either upgraded to VoIP technology or are preparing to do so, making them willing buyers for cable’s offerings.

Former Wall Street analyst Brian Coyne views that as good news for cable investors. Now founder of 3rdRev LLC, a strategic advisory firm for startups, Coyne said cable’s further expansion into business services won’t require major infrastructure expenses, but will generate higher profit margins. He urged cable operators to capitalize on their market advantages by aggressively pursuing larger businesses and opening their networks to third-party application developers, among other things.

The business market’s upgrade to IP services like VoIP and the cloud could accelerate over the next few years, said Kelsyn Rooks, director of solutions marketing at Metaswitch Networks. As more workers adopt a “bring-your-own-smartphone” approach to the workplace, he said, employers will be seeking to regain control over the key data -- contacts, customer information and sales reports -- that’s increasingly stored on employee phones and controlled by the employees. He said creating fixed-mobile convergence solutions for businesses will enable cable operators to play in this market, even if they don’t offer wireless services.

"Everyone is talking about cloud and that means delivering a fixed-line experience to everyone, wherever they are,” Rooks said. He said developing advanced IP products also will help cable compete with such over-the-top players as Microsoft and Google, which offer their own business apps. Rooks also encouraged cable operators to adopt a “micro-transaction” strategy for selling features rather than create more expensive, all-encompassing service bundles. That way, he said, small businesses would be able to pick and choose the services they actually want.

Greg Thor, director of solutions marketing for Genband, suggested the idea of a mobile software client that could integrate Wi-Fi service with high-speed Internet access for small businesses. He also recommended that cable operators consider offering such advanced features as call-center capabilities, HD voice and videoconferencing, saying all of those features are now cost-effective for small businesses but not yet widely delivered. “You can also streamline your operations with a small business portal that not only lets them do moves and changes but also turns features on and off,” Thor said. He conceded, however, that cable companies might not be able to charge extra for Wi-Fi service.

Kevin Stephens, senior vice president-commercial and advertising operations at Suddenlink Communications, focused on the organizational changes needed to support an expanded business sales strategy. He said too many cable companies have their business sales reps report in to the local system general managers, who focus mainly on the residential cable market. To avoid this problem, he said, Suddenlink has created a totally separate commercial market organization with dedicated sales and support teams. “You need to be flexible and entrepreneurial -- that’s our advantage against the ILECs,” Stephens said. That means shortening product cycle times and responding more quickly to customer demands. He said voice has a longer product cycle time than any other telecom service, making it even more critical that all business customers have “a quality experience with us at all touch points."